Proposed health care tax is off target
Improved health care availability is a worthy goal. President Obama and other politicians feel the time is right to try to make some major progress on this front.
As always, the right solution will be difficult to identify and implement, but the question of how to pay for it will be even more problematic.
We have always held that tax-funded programs with broad benefits for wide swaths of the citizenry are best paid for with broadly based taxes. Yet politicians continue to try to devise tax extraction schemes that will be politically most palatable: tax the other guy; not me.
So they are often inclined to propose taxes targeted at particular segments, often specific business sectors that aren't able to muster the political muscle to dissuade them, or sectors that may be unpopular in certain quarters.
While perhaps politically expedient, such endeavors are inherently unwise and unfair.
Proponents of health care reform and expanded coverage - including new health care taxes - are considering targeting hospitality businesses for steep new levies.
Congress may tax beer, wine and spirits an additional $6 billion a year, raising the beer tax alone almost two-and-a-half times more than it is currently. Our calculations indicate the proposals would raise alcohol taxes more than $20 million annually in Montana alone.
You simply can't take $20 million out of the pockets of small businesses and consumers in Montana without dramatically negative consequences. These businesses already pay an estimated $80 million annually in various local, state and federal taxes - about $40,000 each. Now raise that an additional 20 percent or $10,000? That would be a very painful and damaging hit.
To earn $10,000 to pay these new proposed taxes, the typical hospitality business would have to have $100,000 in additional sales. Congressman or Senator, in these times that simply isn't in the cards.
Hospitality businesses employ over 25,000 Montanans, or at least did before this deep recession. Why, through tax policy, assure that more hospitality jobs, often held by people who need them most, are needlessly lost?
Proportionately, these kinds of consumption based excise taxes fall heaviest on middle and lower income brackets, so are regressive in nature, another reason to look to more broadly based taxation.
Sen. Baucus has been a reliable friend of small business. He even worked hard - and effectively - to reduce the tax burden for small businesses a few years ago when he led the effort to do away with the Civil War era Special Occupational Tax levied annually on retail alcohol businesses.
We haven't forgotten, so we respectfully request that he ensure the tables are not turned to once again unfairly burden this one small-business sector.
There are thousands of small businesses in Montana licensed to retail alcohol, for both off- and on-premise consumption. Each needs to let Sen. Baucus, especially, but also Sen. Jon Tester and Rep. Dennis Rehberg know that these proposed alcoholtaxincreases would be a dramatically wrong approach to funding health care reform; that our small Main Street businesses simply cannot carry this crushing weight.
Source: The Montana Tavern Times, July 2009, published monthly by Continental Communications, 125 W Granite, Suite 102, Butte, MT 59701.